Culture Secretary Jeremy Hunt defended his conduct during News Corporation's takeover bid for BSkyB today as he battled for his political life amid demands for his resignation over claims that he was a "cheerleader" for Rupert Murdoch's company.
In a hastily-arranged statement to the House of Commons, Mr Hunt told MPs that he had handled the bid with "scrupulous fairness" and he was not influenced in any way by contacts with News Corp.
Prime Minister David Cameron - who met Hunt in private after yesterday's release of a dossier of emails detailing links between his office and News Corp executives - told the Commons that the Culture Secretary had "my full support for the excellent job that he does".
But the row claimed its first scalp, as special adviser Adam Smith quit, admitting his contact with News Corp "went too far".
Labour leader Ed Miliband, who has called for Mr Hunt's resignation, said the affair has left "a shadow of sleaze" over the Government.
A 163-page dossier released by the Leveson Inquiry into media standards yesterday revealed scores of emails from News Corp executive Frederic Michel detailing his contacts with Mr Hunt's office during the bid process.
Labour said the emails showed Mr Hunt acted as a "back-channel" for the Murdochs, passed secret information to News Corp, and misled Parliament over the extent of his contacts with the company at a time when he held a quasi-judicial responsibility for determining whether the bid should go ahead.
But Lord Justice Leveson cautioned today against jumping to conclusions about the documents, telling the inquiry: "I am acutely aware from considerable experience that documents such as these cannot always be taken at face value, and can frequently bear more than one interpretation."
Mr Hunt told the Commons today that it was "categorically not the case" that the emails were evidence that a back channel existed for News Corp to influence his decision.
"They did not influence my decision in any way," he told MPs.
But he added: "The volume and tone of these communications were clearly not appropriate in a quasi-judicial process and today Adam Smith has resigned as my special adviser.
"Although Adam Smith accepts that he overstepped the mark on this occasion, I want to say on record that I believe he did so unintentionally."
Mr Hunt said he had requested the earliest possible date for him to give evidence to the Leveson Inquiry to set out in full his version of events.
And he told MPs: "I am totally confident that when I present my evidence, the public will see that I conducted this process with scrupulous fairness throughout."
Mr Smith announced his resignation in a statement about an hour before Mr Hunt's appearance in the Commons.
Mr Michel told the inquiry yesterday that, while his emails made repeated reference to contacts with Mr Hunt, these in most cases actually involved communications with Mr Smith.
The special adviser said: "I do not recognise all of what Fred Michel said, but nonetheless I appreciate that my activities at times went too far and have, taken together, created the perception that News Corporation had too close a relationship with the department, contrary to the clear requirements set out by Jeremy Hunt and the permanent secretary that this needed to be a fair and scrupulous process," Mr Smith said.
"Whilst I firmly believe that the process was, in fact, conducted scrupulously fairly, as a result of my activities it is only right for me to step down as special adviser to Jeremy Hunt."
Mr Cameron's official spokesman said the Prime Minister agreed with Mr Smith's decision to resign.
And Mr Hunt paid tribute to his adviser, telling MPs: "He did not believe he was doing anything more than giving advice on process.
"I believe him to be someone of integrity and decency and it is a matter of huge regret to me that this has happened."
Mr Hunt said that, as part of the process of considering whether the bid for BSkyB should be allowed to go ahead, he and his officials "engaged with News Corporation and its representatives as well as other interested parties - both supporters and opponents of the merger".
News Corp's attempt to buy the 61% of the satellite broadcaster which it did not already own was dropped in July 2011 before Mr Hunt reached his final decision, as a result of the furore surrounding allegations of phone-hacking at the company's News of the World newspaper.
Mr Hunt told MPs: "Throughout, I have strictly followed due process, seeking the advice of independent regulators - something I didn't have to do - and after careful consideration acting on their advice."
Fending off renewed demands from Labour deputy leader Harriet Harman for him to go, he said: "This is not the time to jump on a political bandwagon."
His statement came immediately after a raucous session of Questions to the Prime Minister, during which Mr Miliband accused Mr Cameron of putting his cronies at News Corp - including his former adviser and ex-Sun editor Andy Coulson and former News International chief executive Rebekah Brooks - ahead of the interests of the country.
"While his Culture Secretary remains in place, while he refuses to come clean on his and the Chancellor's meetings with Rupert Murdoch, the shadow of sleaze will hang over this Government," said the Labour leader.
"It's a pattern with this Prime Minister - Andy Coulson, Rebekah Brooks, and now the Culture Secretary... When is he going to realise it is time to stop putting his cronies before the interests of the country?"
But Mr Cameron responded: "In judging this important bid, the Culture Secretary sought independent advice from independent regulators at every stage, although he did not need to, and the Culture Secretary took that independent advice at every stage, although he did not need to.
"The way that the Culture Secretary has dealt with this issue is in stark contrast to the Government of which (Mr Miliband) was a member."
Labour said Mr Hunt was in breach of three different requirements of the ministerial code and called on Mr Cameron to refer the case to Sir Alex Allan, the Premier's independent adviser on the code.
The charges made by the Opposition concern:
:: Article 1.2(c) which says it is of "paramount importance that ministers give accurate and truthful information to Parliament, correcting any inadvertent error at the earliest opportunity."
It continues: "Ministers who knowingly mislead Parliament will be expected to offer their resignation to the Prime Minister";
:: Article 3.3 which says: "Individual ministers will be accountable to the Prime Minister, Parliament and the public for their actions and decisions in respect of their special advisers";
:: Article 9.1: "When Parliament is in session, the most important announcements of Government policy should be made in the first instance, in Parliament".
Downing Street said the Cabinet Secretary had written, at Mr Cameron's request, to all Whitehall departments to remind them of the "rigorous process" for dealing with quasi-judicial cases.
The Prime Minister's official spokesman said it made clear "that it is vitally important in dealing with these cases that all contacts with interested parties by ministers, officials and special advisers are carefully controlled and properly recorded so that the independence, integrity and impartiality of the process is upheld."
He was unable to say whether the guidelines in place, which vary from department to department, advised against the involvement of special advisers in such contacts.
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